In Chipendeke, Zimbabwe, a tiny remote village of a hundred or so simple thatched homes, 20km (12 miles) away from the nearest tarred road, a small, practically hand-built technological revolution has taken place, dramatically transforming the lives of the villagers. In short, the people brought electricity to Chipendeke.

With a little expert help from the charity Practical Action, a handful of local volunteer builders spent 12 gruelling months building their own community micro-hydroelectric plant to harness the power of the water that tumbles down from mountains.

"We had to carry all the pipes, cement, stones, power cables and the generator up the hill to build a dam, mini canal, aqueduct and hundreds of metres of water pipes," the secretary of the hydroelectricity scheme, Noah Sengasenga, explains proudly. "Ninety-five per cent of my waking life was spent here. We would start work at 5am and work all day. We would work by moonlight and often not finish until midnight. I would go home and sleep and then do it again."

When work finished in July 2010, Sengasenga and his team had used 1,165 bags of cement, laid more than 300 metres of water pipes and built a dam, constructed a 16-metre forebay to control the flow of water, erected transmission cables and, with the help of Practical Action, built a base station with a generator, turbine and other technical essentials.

Electricity from the plant now provides light in almost 40 homes in the village, which is 30km from Mutare, south-east Zimbabwe. It has transformed the village from a forgotten outpost to a thriving hub. Shops are busy and now sell chilled meat, fish and cold drinks in addition to the staples of rice, biscuits and tinned meat. Farmers can charge up their mobile phones, and listen to the radio.

But it is in community health and education where the true value of electric power is felt. The micro-hydro plant provides a non-stop supply to the village school and local clinic, which means local farmers and their families can access healthcare and education for the first time.

William Chanakira, a nurse, has been working in the village for six years and remembers the dark days before the scheme got under way in July 2010. "We had some big challenges in the maternity system. We had to tell people they had to come to the clinic with their own lighting, so they would bring a candle. People who couldn't afford candles gave birth at home, which was very dangerous," he said.

The risks of giving birth using candlelight at the clinic were high. "It was terrible to try and deliver without adequate light. I couldn't see the wounds clearly and it was difficult to repair the lacerations because I couldn't see where they started. It was impossible to see the birth canal too," Chanakira said.

"But since 2010 we have seen a huge improvement. We used to deliver 20% of births, but now it is 50%. We are now seeing a new mother every three days; before it was just three a month."

In addition, the clinic can now store vaccines at 2-8C (35-46F) in a fridge, meaning children can be given immunisations every day."Before, it was difficult to do properly. We would have to set a specific day and people would have to walk up to 12km, wait all day and we would run out. But now we have electrification we can immunise every day.

"Our vaccine rates have improved from 50% to 85%. We used to get about three deaths a month of children aged under 28 days from tetanus, diarrhoea and poor maternity care. But now we hardly see this anymore. Death rates have nearly gone and we can also treat farmers for snake bites if they get them in the dark."

The village school is also thriving. Previously, it struggled to attract qualified teachers. It lost an average of one teacher a month as they abandoned the privations of rural isolation for urban schools. "Now our teachers stay," said deputy head Big Gova. "Now they can mark work and read until late at night, which makes their jobs easier.

"Before, people used to think of this as a remote area, but now when I see other teachers from town schools they take me more seriously. Next year we are planning to buy two computers so that children get used to using them at school. We are turning into a modern institution."

It is clearly having a positive effect. School numbers have soared from 410 children in 2010 to 590 this year. Now 35% of children get their grade 7 exams, compared with 16% three years ago, and when they need to recruit new teachers, Gova finds he is able to replace them in a week.

Yet things are still not perfect in Chipendeke. Water shortages also mean that in the dry season there can be power outages. The power produced by the micro-hydro plant is just 20kW, nowhere near enough for everyone to be able to access power all the time. The committee that runs the scheme is trying to attract investment into a bigger generator that could quadruple electricity production.

But, teething problems aside, this model is already being copied on a larger scale elsewhere in southern Africa. Practical Action, one of the Guardian's four Christmas appeal charities, says sustainable developments like this should be where efforts are focused. In Malawi, it has just embarked on a $500,000 (£300,000) project to provide off-grid power to thousands of rural villagers, and in the Manicaland region of Zimbabwe, by the Mozambique border, an 80kW micro-hydro system is lighting up the mountainsides.

Back in Chipendeke, Dennis Mawoyo Jr describes how the electricity has changed his life. His children are getting a much better education and the improvements in the maternity service showed when his wife gave birth to his one-year-old daughter, Delayine.

"And for me, I am happy here. People elsewhere in villages like this are leaving for greener pastures, but for me those pastures are here."